When will Solar attain Grid Parity?

When will Solar meet Grid Parity?This is a question that quite a few big brains across the globe would love to answer!

Although costs have come down drastically over the last few years, they are far above cost of alternative technologies. In addition the low capacity utilization of solar, spikes up the levelized cost of generation.So what are the things that is making the world believe that parity is not far way?

There are three major reasons which I feel would lead to grid parity over the next decade-

Firstly, the cost of solar technology will come down in coming years. Important contributers to the latter would be reduction of silicon prices, better economics of scale and improved manufacturing methods. Market estimates that solar technology costs to dip down from anywhere between 5-15% y.o.y over the coming years.

Secondly, the cost of generation of coal projects is going to increase drastically in coming years. The major reason for the above would be increase in fuel costs. The cost of Domestic Coal today is approximately is INR 1250 per ton and cost of International Coal is $70 per ton. According to CERC estimates cost of domestic coal will escalate at 6.66%y.o.y and imported coal will escalate at approximately 15% y.o.y. Also, the expected usage of costlier imported coal in coming years is set to grow from current 10-15% to around 50% which would further increase weighted average cost of coal in the country.

Given, the escalation in fuel costs for coal projects discussed above, for different scenarios of decrease in solar costs between 5% and 15%, the technology will attain grid parity anywhere between 2018 and 2021.

Thirdly, the successful commercial demonstration of battery storage of energy and hybridization of solar thermal with natural gas is going to increase the capacity utilization factor of solar projects, and in process reduce the levelized cost of generation. Faster commercial utilization of storage and utilization will result in solar attaining grid parity far before 2018 as discussed above.

Grid parity will mark an important milestone for global energy and is set to change the dynamics of the industry. Let us wait for the day!